M/s. M.A. Projects (P) Ltd., New Delhi V. DCIT, New Delhi

CO 257/DEL/2014

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3792 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Additional evidence; Validity of assessment
• Section: 142(1); 153A; 68; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: BENCH E NEW DELHI BEFORE SRI R.K.PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 565 /DEL/201 4 A.Y. 200 7 - 08 DCIT , CENTRAL CIRCLE - 03 VS. M.A. PROJECTS (P) LTD. NEW DELHI BA - 17A, DDA FLATS ASOK VIHAR NEW DELHI 110 0 52 PAN: AAECM 2372 E CROSS OBJECTION NO.257/DEL/2014 (IN ITA 565/DEL/2014) ASSESSMENT YEAR 2007 - 08 M.A.PROJECTS (P) LTD. VS. DCIT, C.C. 3 NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : MS. SHEFALI SWAROOP, CIT, D R ASSESSEE BY: SH. SURESH GUPTA, C.A. DATE OF HEARING: 05.04.2 018 DATE OF PRONOUNCEMENT : 04.05. 2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT CROSS A PPEAL S HA VE BEEN FILED BY REVENUE AND ASSESSEE AGAINST ORDER DATED 13/11/13 PASSED BY LD.CIT (A) - 1, NE W DELHI FOR ASSESSMENT YEAR 2007 - 08 ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A. 2. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.3,50,00,000/ - ON ACCOUNT OF CASH CREDIT MADE BY THE AO. ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 2 3. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,75,00,000/ - ON ACCOUNT OF COMMISSION @ 0.5%. 4. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.14 ,00,000/ - ON ACCOUNT OF UNSECURED LOANS. 5. (A) T HE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. CROSS OBJECTION 257/DEL/2014 THE LD.CIT(A) ERRED BOTH IN LAW AND ON FACTS IN NOT QUASHING THE ENTIRE ADDITION OF RS.3,65,75,000/ - ON THE BASIS OF LEGAL GROUND THAT THE ADDITIONS IN QUESTION HAVE NO RELATION WHATSOEVER TO THE MATERIAL OR EVIDENCE FOUND IN THE COURSE OF SEARCH AND THERE WERE NO PENDING ASSESSMENT PROCEEDINGS ON THE DATE OF SEARCH ABATING UNDER SECOND PROVISO TO S.153A(1). 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEE FOR THE YEAR UNDER CONSIDERATION HAD FILED RETURN OF INCOME DECLARING NIL INCOME. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE PREMISES OF MAHESH MEHTA GROUP OF CASES ON 30/06/09. AS PER SEARCH WARRANT AND PUNCHNAMA ASSESSEE COMPANY WAS ALSO COVERED UNDER SECTION 132/133A OF THE INCOME TAX ACT, 1961 (THE A CT ) . CASE WAS CENTRALISED ALONG WITH OTHER CASES OF MAHESH MEHTA GROUP OF CASES/COMPANIES. SUBSEQUENTLY NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED IN RESPON SE TO THE ABOVE ASSESSME NT YEAR S ON 13/04/10 FOR FURNISHING OF RETURN S . ASSESSEE ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 3 FILED RETURN OF INCOME, ORIGINALLY FILED AS PER PROVISIONS OF SECTION 139 OF THE ACT FOR THE YEAR UNDER CONSIDERATION ON 13/04/10. 2.1. ASSESSING O FFICER THEREAFTER ISSUED NOTICE UNDER SECTION 143(2 ) READ WITH 142(1) OF THE A CT ALONG WITH QUESTIONNAIRE IN RESPONSE TO WHICH A UTHORISED R EPRESENTATIVE OF ASSESSEE ATTENDED ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND FURNISHED REQUIRED INFORMATION/DETAILS AS CALLED FOR. LD.AO OBSERVED THAT ASSESSEE DUR ING THE YEAR HAD SHOWN NO BUSINESS ACTIVITY BEING CARRIED OUT , HOWEVER , ASSESSEE DIVERSIF IED ITS FUNDS TO SISTER CONCERNS/COMPANIES , WHERE THE D IRECTORS WERE HAVING SUBSTANTIAL INTEREST. IT WAS OBSERVED THAT THESE COMPANIES WERE ENGAGED IN PROPERTY TRANSACTION AND AS NOTICED DURING THE COURSE OF SEARCH , PROFITS EARNED WAS NOT DISCLOSED PROPERLY BY THESE COMPANIES. THE ASSESSMENT WAS COMPLETED BY LD.A.O. AT AN INCOME OF RS.3,65,75,000/ - AFTER MAKING FOLLOWING ADDITIONS: ADDITION U /S 68 OF THE ACT O N ACCOUNT OF CASH CREDIT - RS.3,50,00,000/ - ADDITION ON ACCOUNT OF COMMISSION AT 0.5% - RS.1,75,000/ - ADDITION ON ACCOUNT OF UNSECURED LOANS - RS.14,00,000/ - 2.2. A GGRIEVED BY ADDITIONS MADE, ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A). BEFORE LD.CIT(A), APART FROM CHALLENGING ADDITIONS MADE BY LD.AO , ASSESSEE CHALLENGED VALIDITY OF ASSESSMENT PROCEEDINGS UNDER SECTION 153A OF THE ACT , WHICH WAS NOT BASED ON ANY SEIZED MATERIALS. ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 4 2.3. LD.CIT(A) UPHELD THE ASSESSMENT PROCEEDINGS BUT DELETED ADDITI ONS ON THE BASIS OF THE DOCUMENTS FILED BY ASSESSEE AS ADDITIONAL EVIDENCE. 3. AGGRIEVED BY ORDER OF LD.CIT(A) REVENUE AS WELL AS ASSESSEE ARE IN CROSS APPEALS BEFORE US. 4. IN APPEAL FILED BY REVENUE ADDITION DELETED BY LD.CIT(A) IS UNDER CHALLENGE AN D WITH THE ADMI SSION OF ADDITIONAL EVIDENCE UNDER RULE 46A. 4.1 . IN THE C ROSS O BJECTION, ASSESSEE, HAS CHALLENGED LEGALITY OF ASSESSMENT ORDER PASSED UNDER SECTION 153A OF THE ACT . SINCE THIS ISSUE RAISED IN CROSS OBJECTION G OES TO ROOT OF ADDITION, WE ARE PROCEEDING TO ADJUDICATE THE C ROSS O BJECTION RAISED BY ASSESSEE FIRST. AT THE OUTSET LD.AR RELIED UPON DECISION OF C OORDINATE B ENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MKR CONSTRUCTION PVT.LTD., IN ITA NO. 5444/ D EL/20 13 ALONG WITH CO NO. 128/ D EL/2014 FOR ASSESSMENT YEAR 2004 - 05. IT WAS SUBMITTED THAT M/S MKR CONSTRUCTION PVT. LTD. WAS ALSO ONE OF THE GROUP CONCERNS OF MAHESH MEHTA ON WHOM SEARCH WAS CONDUCTED. 4.2 . ON PERUSAL OF ORDER OF THIS TRIBUNAL IN ACIT VS. MKR CONSTRUCTION PVT.LTD., IT IS OBSERVED THAT SIMILAR ADDITION WAS MADE WITHOUT THERE BEING ANY MATERIAL OR INFORMATION GATHERED DURING THE COURSE OF SEARCH. LD. AR PLACED RELIANCE UPON THE COPY OF THE PUNCHNAMA PLACED AT PAGE 14 - 18 ALONG WITH THE COPY OF THE STATEMENT OF SH. MAHESH MEHTA UNDER SECTION 132 (4) OF THE A CT PLACED AT PAGE 19 - 24 OF PAPER BOOK. FROM, PUNCHNAMA IT HAS BEEN ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 5 POINTED OUT THAT NOTHING RELATING TO SHARE APPLICATION MONEY WAS FOUND DURING SEARCH IN CASE OF PRESENT ASSESSEE AND THAT ANSWERS TO VARIOUS QUESTIONS RAISED IN THE STATEMENT OF SH. MA HE SH MEHTA, RECORDED DURING SEARCH DID NOT REFER TO ANY SHARE APPLICATION MONEY NOR ANYTHING IS MENTIONED ABOUT ASSESSEE LINKING WITH ANY DOCUMENT SEIZED FOR ASSESSMENT YEAR UNDER CONSIDERATION BEFORE US. THE ONLY RELEVANT QUESTION THAT HAS BEEN REFERRED TO IN THE STATEMENT RECORDED, REGARDING ASSESSEE BEFORE US IS AS UNDER: Q.9. KINDLY REFER TO BUNCH A - 5 SEIZED FROM YOUR RESIDENCE CONTAINING 102 PAGES AND YOUR ATTENTION IS SPECIFICALLY INITI ATED TO PAGE 97 - 99. KINDLY STATE THE FACTS OF THIS TRANSACTION IN DETAIL. ANS. THIS BUNCH OF PAPER IS RELATED TO CORRESPONDENCE AND AGREEMENT IN RESPECT OF PROPERTY PLOT NO. 115 PHASE - 1, UDYOG VIHAR , GURGAON, OWNED BY THE COMPANY M / S RAJ REFILLERS AND FI RE SAFETY EQUIPMENT (P) LTD. WHICH WAS OWNED BY WAY O F SHAREHOLDING BY MR. RAKES H KUMAR GARG S/O DEVI DAS GARG AND SANTOSH KUMAR GARG S/O DEVI DAS GARG VIDE AGREEMENT DATED 04.09.2007 PLACED IN THIS BUNCH AT PAGE 77 T O 80. THIS PROPERTY WAS TRANSFERRED TO ME AND MY WIFE SMT. KUSUM MEHTA (50% SHARE EACH) BY WAY OF TRANSFER OF 3500 E QUITY SHARES FOR CONSIDERATION OF RS . 2.18 CRORES. APART FROM THIS WE HAD ALSO REPAID UNSECURED LOANS OF THE SHAREHOLDERS OF APPROXIMATELY RS. 3 CRORES. IN THIS WAY TOTAL CONSID ERATION FOR ACQUIRING THE PROPERTY HELD IN THE COMPANY WAS R S .5.L8 CRORE. TRANSFER OF SHARES FROM RA K ESH GARG AND SANTOSH GARG IN MY NAME AND WIFE'S NAME BY HARYANA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. VIDE LETTER DATED 14.L2.20 07 PLACED AT PAGE 101 OF THE BUNCH. TO GET OUT OF THIS LITIGATION M Y SELF AND MY WIFE AGREE D TO TRANSFER THEIR ENTIRE SHAREHOLDING TO MEMBERS OF ARORA FAMILY (C/O LAMBADA M ICROWAVE) 475, UDYOG VIHAR, PHASE - IV, GURGA ON, H ARYANA . INITIALLY THE DRAFT AGREEM ENT WAS PREPARED ON 22.02.2008 WHICH IS PLACED ON PAGE 97 TO 99 OF THE BUNCH WHEREAS ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 6 AS IN CAPACITY OF SELLERS MYSELF AND MY WIFE AGREED TO TRANSFER TO THE SHARES TO MR KUNJAN ARORA S/O RAMESH ARORA OR THEIR NOMINEE FOR TOTAL CONSIDERATION OF RS.25,00,01,1 00 / - (RUPEES TWENTY FIVE CRORES ELEVEN HUNDRED ONLY) IT WAS AGREED THAT AT THE TIME OF SIGNING OF AGREEMENT, AMOUNT OF RS. 18,50,01,100 / - (RUPEES EIGHTEEN CRORE FIFTY LACS ELEVEN HUNDRED ONLY) AND REMAINING AMOUNT OF RS.6.50 CRORE WOULD BE PAID AT THE TIME OF PROVISIONAL TRANSFER AND FINAL TRANSFER OF PLOT TO MR.KUNJAN ARORA OR HIS NOMINEE. HOWEVER, LATER ON, IN ACTUAL TRANSACTION DATE OF PAYMENT HAVE UNDERGONE VARIATION AND IT WAS ORALLY AGREED THAT OUT OF THIS TOTAL C ONSI DERATION OF RS. 25, 00,01,100 / - EXPENSES FOR TRANSFER WITH HSIIDC (APPROX. 1.5 CRORE ) WOULD BE D EDUCTED FROM THE CONSIDERATION. TILL DATE I HAVE RECEIVED RS. 18,50,01,100 / - . S UBSTANTIAL PART OF RS. 6.93 CRORE WERE RECEIVED IN JUNE 2009 ITSELF. NOW, SHARES ARE TO BE TRANSFERRED IN THE NAME OF NOMINEE OF MR.KUN J AN ARORA I.E. DEEPTI ARORA W / O KUNJAN ARORA AN D RAMESH ARORA FATHER OF KUNJAN ARORA. SANTOS GARG HAS ALREADY TRA NSFERRED SHARES IN FAVOUR OF NOMINEE OF KUNJAN ARORA IN F.Y. 2008 - 09, REMAINING FOR MALITIES ARE LIKELY TO BE COMPLETED IN THE COMING MONTH AND BALANCE PAYMENT C OULD BE RECE IVED BY ME AFTER FTL. Q.10. IN WHAT WAY, THIS AMOUNT OFRS.18,50,01,100 / - IS RECEI VED IN YOUR BOOKS OF ACCOUNTS ? ANS. AS PER MY DIRECTION AND DIRECTION OF MY WIFE, THE ENTIRE AMOUNT WAS RECEIVED IN THE COM PANIES M / S M.A. PROJE C TS (P) LTD. AND M / S M.K.R. CONSTRUCTION (P) LTD. 4.3 . FURTHER IN RESPONSE TO QUESTION NO. 15 RAISED BY AUTHORITIES, SH.MA HE SH MEHTA OFFERED FOR TAXATION ADDITIONAL UNACCOUNTED INCOME IN OTHER CONCERNS RELEVANT FOR ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 BUT NOTHING HAS BEEN SURRENDERED OR OFFERED TO TAX RELATING TO PRESENT ASSESSEE FOR ASSESSMENT YEAR UNDER CO NSIDERATION BEFORE US. ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 7 4.4 . IT HAS BEEN SUBMITTED BY LD.AR THAT NOTHING INCRIMINATING WAS FOUND DURING SEARCH IN CASE OF ASSESSEE, RELATING TO IMPUGNED ADDITIONS FOR YEAR UNDER CONSIDERATION AND THEREFORE NO ADDITION CAN BE MADE WITHIN THE SCOPE OF ASSES SMENT UNDER SECTION 153A OF THE ACT, MORE PARTICULARLY WHEN ASSESSMENT HAS NOT ABATED, AND STATUTORY LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143 (2) HAS EXPIRED. 5. ON THE CONTRARY LD.CIT , DR SUBMITTED THAT ONCE A SSESSING O FFICER IS REQUIRED UNDER LAW TO AS SESS OR REASSESS FOR A SSESSMENT Y EARS COVERED UNDER SECTION 153A, THEN A SSESSING O FFICER (A.O.) HAS ALL THE POWERS TO EXAMINE ALL THE ISSUES, INCLUDING ISSUES ARISING OUT OF ORIGINAL RETURN OF INCOME OR ASSESSMENT. SHE SUBMITTED THAT POWERS ENVISAGED UPON A.O. UNDER SECTION 153A OF THE ACT ARE UNFETTERED. BY PLACING RELIANCE UPON DECISION OF HON BLE DELHI HIGH COURT IN CASE OF CIT VS ANIL KUMAR BHATIA REPORTED IN 352 ITR 493 , SHE SUBMITTED THAT HON BLE HIGH COURT HAS HELD THAT A.O. UNDER SECTION 153A IS T O ASSESS TOTAL INCOME FOR ASSESSMENT YEAR NOT RESTRICTING TO SEIZED MATERIALS. 5.1 . WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. WE HAVE ALSO PERUSED THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS ANIL KUMAR BHATIA (SUPRA) . WE REFER TO THE FOLLOWING OBSERVATIONS OF HON BLE HIGH COURT IN THE CASE OF CIT VS ANIL KUMAR BHATIA (SUPRA ): 22. IF IT IS NOT IN DISPUTE THAT THE DOCUMENT WAS FOUND IN THE COURSE OF THE SEARCH OF THE ASSESSEE, THEN SECTION 153A IS TRIGGERED. ONCE THE SECTION IS TRIGGERED, IT APPEARS MANDATORY FOR THE ASSESSING OFFICER TO ISSUE ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 8 NOTICES UNDER SECT ION 153A CALLING UPON THE ASSESSEE TO FILE RETURNS FOR THE SIX ASSESSMENT YEARS PRIOR TO THE YEAR IN WHICH THE SEARCH TOOK PLACE. 23. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN. 5.2 . ON PERUSAL OF PUNCHNAMA PLACED IN PAPER BOOK AT PAGE 14, IT IS OBSERVED THAT ASSESSEE S NAME NOWHERE APPEARS, AND SEIZED MATERIALS ARE IN CASE OF SH.MAHESH MEHTA, M/S. MAHESH WOOD PRODUCTS PVT. LTD. FURTHER, THE STATEMENT RECORDED UNDER SECTION 133 (4 ) OF SH.MAHESH MEHTA DO NOT REFER TO ANY SEIZED MATERIAL RELATING TO SHARE APPLICATION MONEY RECEIVED BY ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 5.3 . IN A SUBSEQUENT DECISION BY HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN 380 ITR 570 , HON BLE C OURT OBSERVED AND HELD AS UNDER: 35. IN COMMISSIONER OF INCOME TAX V. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD . [2015] 58 TAXMANN.COM 78 (BOM) THE QUESTION ADDRESSED BY THE BOMBAY HIGH COURT WAS WHETHER THE SCOPE OF ASSESSMENT UNDER SECTION 153A ENCOMPASSES ADDITIONS, NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH? IT WAS HELD THAT NO ADDITION C OULD BE MADE IN RESPECT OF THE ASSESSMENTS THAT HAD BECOME FINAL IN THE EVENT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH. THE BOMBAY HIGH COURT RELIED ON ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 9 THE EARLIER DECISION IN CIT V. M/S. MURLI AG RO PRODUCTS LTD . (SUPRA) AND DISCUSSED THE SCOPE AND AMBIT OF THE PROCEEDINGS FOR ASSESSMENT AND REASSESSMENT OF TOTAL INCOME UNDER SECTION 153A (1) OF THE ACT AND THE PROVISOS THERETO. ONE OF THE SPECIFIC PLEAS TAKEN BY THE ASSESSEE WAS THAT IF NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH IN RESPECT OF AN ISSUE THEN NO ADDITION IN RESPECT OF ANY ISSUE CAN BE MADE TO THE ASSESSMENT UNDER SECTIONS 153A AND 153C . IT WAS OBSERVED THAT THE ASSESSMENT OR REASSESSMENT UNDER SECTION 153A ARISES ONLY WHEN A SEARCH HAS BEEN INITIATED AND CONDUCTED AND, THEREFORE, 'SUCH AN ASSESSMENT HAS A VITAL LINK WITH THE INITIATION AND CONDUCT OF THE SEARCH.' THE COURT THEN REPRODUCED AND AFFIRMED THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN ALL CARGO GLOBAL LOGISTICS LTD. V. DEPUTY COMMISSIONER OF INCOME TA X [2012] 23 TAXMANN.COM 103 (MUM.) (SB) AND ANSWERED THE QUESTION AS REGARDS THE SCOPE OF THE ASSESSMENT OF TOTAL INCOME AS UNDER: '53. ....WE ARE OF THE VIEW THAT FOR ANSWERING THIS QUESTION, GUIDANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1) . IF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH IN OUR HUMBLE OPINION SUCH B OOKS OF ACCOUNT OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO ACCOUNT WHILE MAKING ASSESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER THE AFORESAID PROVISION. SIMILAR POSITION WILL OBTAIN IN A CASE WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND A S A CONSEQUENCE OF SEARCH. IN ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 10 OTHER WORDS, HARMONIOUS INTERPRETATION WILL PRODUCE THE FOLLOWING RESULTS: (A) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESSMENT U/S 153A MERGE INTO ONE AND ONLY ONE ASSE SSMENT FOR EACH ASSESSMENT YEAR SHALL BE MADE SEPARATELY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO, (B) IN RESPECT OF NON - ABATED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BASIS OF BO OKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH' 36. ULTIMATELY IN CONTINENTAL WAREHOUSING (SUPRA), THE BOMBAY HIGH COURT ANSWERED THE QUESTION FRAMED BY IT AS UNDER: 'A. IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153AFOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSE SSMENT YEARS SEPARATELY; B. IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUN T, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH.' SUMMARY OF THE LEGAL POSITION ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 11 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHI CH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERI AL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 12 V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASS ESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDI SCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 5.4 . ON THE BASIS OF THE ABOVE OBSERVATIONS BY HON BLE DELHI HIGH COURT IN THE CASE OF CIT V S. KABUL CHAWLA (SUPRA) , THIS TRIBUNA L IN THE CASE OF ACIT VERSUS MKR C ONSTRUCTION PVT.LTD. (SUPRA ), HELD AS UNDER: 11. THUS , FOLLOWING THE ABOVE AFORESAID PROPOSITION OF LAW AND ADMITTED FACT OF THE CASE ARE THAT THERE IS NO INCRIMINATING MATERIAL QUA THE SSESSMENT YEAR FOR WHICH IMPUGNED ADDITION HAS BEEN MADE, WE HOLD THAT SUCH AN ADDITION CANNOT BE ROPED IN IN THE ASSESSMENT ORDER PASSED U/S 153A. ACCORDINGLY, SAME IS DIRECTED TO BE DELETED. SO FAR AS THE RELIANCE PLACED BY LD.CIT, DR ON THE JUDGMENT OF ANIL KUMAR BHATIA, WE FIND THAT THE HON BLE ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 13 HIGH COURT ITSELF HAD CLARIFIED THAT THERE IS NO INCRIMINATING MATERIAL WAS FOU ND DURING THE COURSE OF SEARCH AND, THEREFORE, NO EXPRESS OPINION AS TO WHE THER T HE A DDIT IO N CAN BE M A DE U/S 1 5 3A W AS MA DE BY TH EI R L ORDSHI PS . T H E R E L E V AN T O B SERVAT I O N IN P ARA 23 O F TH E JU DGM EN T I S R EPROD UCED HE RE U N DER. - WE AR E N O T CONC E R N ED WITH A CAS E WHERE N O INC R IMINAT I NG M A T ER I AL W A S FO U ND DURING T H E SEARC H C ONDUCTED U / S 132 O F T H E AC T . W E , THER EFORE , EXP R E S S NO OPIN I ON AS TO WHE THER S ECTION 153A CAN B E INVOKED E V EN I N SUCH A SITUATION. THA T QU ES T IO N IS THEREFORE LEF T OPEN. ' HENCE, THE RELIANCE PLACED B Y TH E LEARNED CIT DR ON THIS JUDGMENT IS W HOLL Y MISPLACED . 12. ACCORDINGL Y, WE ALLO W THE GROUNDS RAISED IN THE CROSS OBJECTION B Y DELETING THE ENTIRE ADDITION MADE BY THE ASSESSI NG OFFICER ON THE GROUND THAT I T IS BE Y OND THE SCOPE OF ASSESSMEN T MADE UJ S 153A. SINCE WE H AV E QUASHED THE ' ADDITION ON THE LEGAL GROUND THEREFORE , T HE GROUNDS RAISED B Y THE REVENUE HAS BEEN RENDE RED INFRUCTUOUS AND PUREL Y ACADEMIC IN NATURE AND THEREFORE G R O U NDS RAISED B Y THE REVENUE IS DISMISSED AND REV ENUE ' S OBJECTIONS RA I SED B Y THE ASSESSEE IS ALLOWED. 5.5. RESPECTFULLY FOLLOWING THE SAME WE ALSO ALLOW THE LEGAL ISSUE RAISED BY ASSESS EE IN THE C ROSS O BJECTION. SINCE WE HAVE QUASHED THE ASSESSMENT PROCEEDINGS ITSELF , THE GROUNDS RAISED BY REVENUE BECOMES ACADEMIC IN NATURE AND ARE DISMISSED. 6. IN THE RESULT THE C ROSS O BJECTION FILED BY ASSESSEE STANDS ALLOWED AND THE APPEAL FILED BY R EVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 4 T H M A Y , 2 018. S D / - S D / - (R.K.PANDA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 0 4 T H M A Y , 2018 *MV ITA 565/DEL/2014 ASSESSMENT YEAR : 2007 - 08 DCIT VS. M.A.PROJECTS (P) LTD., NEW DELHI & C.O.257/DEL/2014 14 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES